Re: maybe lets be less moderate....

From: Glyn Holton
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Date: 17 Aug 2007
Time: 11:10:08

Comments

Hi Krassimir: I don't think we are in agreement at all. Did you read the part where I said "Anyone who has delved into the literature on efficient markets should smell a rat when thousands of hedge funds are being launched each year, all flamboyantly claiming they can earn returns massive enough to cover their typically 2% management fee, 0.4% 'administrative fee' and 20% incentive fee, not to mention the enormous brokerage fees the funds rack up on their frenetic trading." I'm not saying there is a problem with the funds getting too large and their brilliant strategies drying up. I am saying the brilliant strategies don't exist. I really like what BD says: "The efficient market hypothesis seems like a lot of those ideas from economics in which in individual cases is wrong, but somehow in aggregate is correct." There have been rare market inefficiencies that professional traders have exploited, including fixed income arbitrage and statistical arbitrage. What the literature on efficient markets documents is how exceedingly rare such opportunities are. Year in and year out, study after study documented the fact that active investment managers do not add value for their clients. Hedge funds don't change anything. They are just more expensive and, being far removed from regulators, more prone to dishonest practices. People who are interested may want to read my www.riskglossary.com articles on market efficiency http://www.riskglossary.com/articles/efficient_market_hypothesis.htm and hedge funds http://www.riskglossary.com/articles/hedge_fund.htm

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